Exhibit 10.18
--------------------------------------------------------------------------------
TULTEX CORPORATION
CALIFORNIA SHIRT SALES, INC.
DOMINION STORES, INC.
TULTEX/T-SHIRT CITY, INC.
TRACK GEAR, INC.
AKOM, LTD.
DOMINION DISTRIBUTION, INC.
LIGA MAYOR DE MEXICO, S.A. DE C.V.
TULTEX SUBSIDIARY (VA), INC.
TULTEX SUBSIDIARY (MASS), INC.
TULTEX CANADA, INC.
SWEATJET INCORPORATED
TULTEX INTERNATIONAL, INC.
--------------------------------------------
MASTER COLLATERAL AND
SECURITY AGREEMENT
--------------------------------------------
TO
U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE
DATED AS OF MAY 7, 1999
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
1. PRELIMINARY STATEMENTS...............................................................1
2. INTERPRETATION OF THIS AGREEMENT.....................................................2
2.1 Terms Defined.................................................................2
2.2 Section Headings and Table of Contents and Construction, etc.................12
2.3 Separate Agreements..........................................................13
2.4 Partial Invalidity...........................................................13
2.5 Governing Law................................................................13
3. COLLATERAL..........................................................................13
3.1 Grant of Security Interest...................................................13
3.2 Collateral-Related Rights and Undertakings...................................14
3.3 Covenant Regarding Additional Real Estate and Leases.........................21
3.4 Covenant Regarding Proprietary Rights........................................21
3.5 Covenant Regarding Notices to the Agent......................................22
3.6 Assignment of Claims Act.....................................................22
4. REPRESENTATIONS AND WARRANTIES......................................................22
4.1 Ownership of Collateral......................................................22
4.2 Incorporation................................................................22
4.3 Corporate Powers and Authorization...........................................23
4.4 Governmental Filings; Registration...........................................23
4.5 Enforceability...............................................................24
4.6 Location of Inventory and Equipment, etc.....................................24
4.7 Proprietary Rights...........................................................25
4.8 Receivables..................................................................25
4.9 Real Property................................................................25
4.10 Year 2000 Compliance.........................................................25
4.11 Accuracy of Preliminary Statements...........................................25
5. DEFAULTS -- REMEDIES................................................................25
5.1 Default Remedies.............................................................25
5.2 Other Enforcement Rights.....................................................28
5.3 Power of Attorney............................................................28
5.4 Effect of Sale, etc..........................................................29
5.5 Delay or Omission; No Waiver.................................................29
5.6 Restoration of Rights and Remedies...........................................30
5.7 Application of Proceeds......................................................30
5.8 Cumulative Remedies..........................................................30
5.9 Waivers by the Obligors......................................................30
5.10 Consent......................................................................31
ii
6. MISCELLANEOUS.......................................................................31
6.1 Communications...............................................................31
6.2 Waiver and Amendment.........................................................31
6.3 Survival.....................................................................31
6.4 Successors and Assigns.......................................................32
6.5 Reproduction of Documents....................................................32
6.6 Additional Parties...........................................................32
6.7 Consistent with Indentures and Intercreditor Agreement.......................32
6.8 Term of Agreement............................................................33
6.9 Entire Agreement.............................................................33
6.10 Execution in Counterpart.....................................................33
Annex 1 -- Principal Executive Offices; Location of Books and Records; Trade Names
Annex 2 -- Locations of Inventory and Equipment
Annex 3 -- Trademarks, Trade Names and Patents
Annex 4 -- Real Estate
Annex 5 - Five Specified Real Properties
Annex 6 - Nine Specified Real Properties
Exhibit A -- Form of Acknowledgment and Agreement
iii
MASTER COLLATERAL AND SECURITY AGREEMENT
MASTER COLLATERAL AND SECURITY AGREEMENT (as may be amended, restated,
supplemented or otherwise modified from time to time, this "AGREEMENT"), dated
as of May 7, 1999, among each of TULTEX CORPORATION, a Virginia corporation
(together, with its successors and assigns, the "COMPANY"), CALIFORNIA SHIRT
SALES, INC., a Virginia corporation ("CALIFORNIA SHIRT"), DOMINION STORES, INC.,
a Virginia corporation ("DOMINION STORES"), TULTEX/T-SHIRT CITY, INC., a
Virginia corporation, TRACK GEAR, INC., a Virginia corporation, AKOM, LTD., a
Cayman Islands, B.W.I. corporation ("AKOM"), DOMINION DISTRIBUTION, INC., a
Virginia corporation, LIGA MAYOR DE MEXICO S.A. DE C.V., a Mexican corporation,
TULTEX SUBSIDIARY (VA) INC., a Virginia corporation formerly known as Logo
Athletic, Inc. and Logo 7, Inc. ("TULTEX VIRGINIA"), TULTEX SUBSIDIARY (MASS)
INC., a Massachusetts corporation formerly known as Universal Industries, Inc.
and as Logo Athletic/Headwear, Inc. ("TULTEX MASSACHUSETTS"), TULTEX CANADA,
INC., a Canadian corporation ("TULTEX CANADA"), SWEATJET INCORPORATED, a
Virginia corporation ("SWEATJET"), and TULTEX INTERNATIONAL, INC., a Virginia
corporation ("TULTEX INTERNATIONAL") (all of the foregoing (other than the
Company), together with their respective successors and assigns, referred to
herein, individually, as a "SUBSIDIARY GRANTOR," and, collectively, as the
"SUBSIDIARY GRANTORS;" the Company and the Subsidiary Grantors being
collectively referred to herein as the "OBLIGORS"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as beneficiary and grantee ("US
BANK"), not in its individual corporate capacity but solely in its capacity as
security trustee (in its capacity as such security trustee, and together with
any successor or co-security trustee that becomes such in accordance with the
provisions of the Indentures (as hereinafter defined), the "TRUSTEE") for the
Noteholders (as hereinafter defined) pursuant to the Indentures. Capitalized
terms used herein, and not otherwise defined herein, have the respective
meanings ascribed thereto in Section 2.1; and interpretive provisions with
respect to certain other terms used herein are set forth in Section 2.2.
1. PRELIMINARY STATEMENTS
1.1 The Company, as issuer, AKOM, Dominion Stores, California Shirt,
Tultex International, Logo 7, Inc. (predecessor to Tultex Virginia), Universal
Industries, Inc. (predecessor to Tultex Massachusetts), Tultex Canada and
Sweatjet, as guarantors, and First Union National Bank of Virginia ("FIRST
UNION"), as trustee, entered into an indenture, dated as of March 15, 1995 (the
"1995 INDENTURE"), pursuant to which the Company was authorized to issue
$110,000,000 in Securities (as defined therein) and said guarantors were
obligated to Guarantee (as defined therein) any such issued Securities. The 1995
Indenture was amended by that certain First Supplemental Indenture, dated May
1, 1997, and is being further amended by that certain Second Supplemental
Indenture, on or about the date hereof (the 1995 Indenture, as amended by said
First and Second Supplemental Indentures, is referred to herein as the "FIRST
INDENTURE").
1.2 The Company, as issuer, AKOM, Dominion Stores, Logo 7, Inc.
(predecessor to Tultex Virginia), Universal Industries, Inc. (predecessor to
Tultex Massachusetts), Sweatjet, Tultex International and Tultex Canada, as
guarantors, and First Union, as trustee, entered into an indenture, dated as of
April 15, 1997 (the "1997 INDENTURE"), pursuant to which the Company was
authorized to issue $75,000,000 in Securities (as defined therein) and said
guarantors were obligated to Guarantee (as defined therein) any such issued
Securities. The 1997 Indenture was amended by that certain First Supplemental
Indenture, dated May
1
1, 1997, and is being further amended by that certain Second Supplemental
Indenture, on or about the date hereof (the 1997 Indenture, as amended by said
First and Second Supplemental Indentures, is referred to herein as the "SECOND
INDENTURE"; the First Indenture and the Second Indenture are collectively
referred to herein as the "INDENTURES," which term shall refer to such
Indentures, as each may be amended, supplemented, restated or otherwise modified
from time to time).
1.3 Pursuant to the First Indenture the Company issued certain 10-5/8%
Senior Notes due March 15, 2005. Pursuant to the Second Indenture the Company
issued certain 9-5/8% Senior Notes due April 15, 2007. Such notes, as amended,
extended, renewed, consolidated or otherwise modified from time to time,
together with any and all notes that may be given from time to time in
substitution or replacement therefor, are collectively referred to herein as the
"NOTES." The Persons whose names appear on the register, maintained pursuant to
each Indenture for the registration and for the transfer and exchange of Notes,
as the registered owners from time to time of any of the Notes are collectively
referred to herein as the "NOTEHOLDERS."
1.4 The indebtedness evidenced by the Notes bears interest and is
payable as provided in the Notes and the Indentures.
1.5 To induce the Noteholders to enter into the Second Supplemental
Indenture which amends the 1995 Indenture and the Second Supplemental Indenture
which amends the 1997 Indenture, the Obligors have agreed to execute and deliver
this Agreement as security for the Secured Obligations.
1.6 The Liens granted herein to the Trustee by each of the Obligors are
for the ratable benefit of the Noteholders, as provided in the Indentures.
1.7 The Trustee is to act as trustee on behalf of the Noteholders, in
accordance with the terms of the Indentures, this Agreement and the other
Financing Documents.
1.8 All acts and proceedings required by law and by the certificate or
articles of incorporation and bylaws of each of the Obligors necessary to
constitute this Agreement a valid and binding agreement for the uses and
purposes set forth herein, in accordance with its terms, have been done and
taken, and the execution and delivery hereof has been in all respects duly
authorized.
2. INTERPRETATION OF THIS AGREEMENT
2.1 TERMS DEFINED.
As used in this Agreement, the following terms have the respective
meanings set forth below or provided for in the section or other part of this
Agreement referred to immediately following such term (such definitions to be
equally applicable to both the singular and plural forms of the terms defined)
or, if not defined herein, then as defined in the Indentures.
ACCOUNT DEBTOR -- means a Person who is obligated on a Receivable.
AGENT - means NationsBank, N.A., in its capacity as Agent for the
Lenders under the Loan Agreement, together with its successors and assigns in
such capacity.
AGREEMENT -- has the meaning set forth in the introductory sentence
hereof.
2
AKOM -- has the meaning specified in the introductory sentence hereof.
BOOKS AND RECORDS -- means all books, records, operator's manuals,
ledger cards, computer programs, computer disks and tapes and other similar
Property and general intangibles at any time evidencing or relating to any of
the Obligors' Receivables, Inventory or other Property constituting Collateral.
CALIFORNIA SHIRT - has the meaning set forth in the introductory
sentence hereof.
CAPITAL LEASE -- means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
CAPITALIZED LEASE OBLIGATION -- means Indebtedness represented by
obligations under a Capital Lease, and the amount of such Indebtedness shall be
the capitalized amount of such obligations determined in accordance with GAAP.
COLLATERAL -- means and includes, collectively, all of the collateral
referred to in each of the Security Documents and all of each Obligor's right,
title and interest in and to each of the following, wherever located and whether
now or hereafter existing or now owned or hereafter acquired or arising:
(a) all Receivables;
(b) all Inventory;
(c) all Contract Rights;
(d) all General Intangibles;
(e) all Tax Refund Claims;
(f) all Equipment;
(g) all Real Estate;
(h) all goods and other Property, whether or not
delivered, (i) the sale or lease of which gives or purports to give rise
to any Receivable, including all merchandise returned or rejected by or
repossessed from customers, or (ii) securing any Receivable, including
all rights as an unpaid vendor or lienor (including stoppage in transit,
replevin and reclamation) with respect to such goods and other Property;
(i) all mortgages, deeds to secure debt and deeds of trust
on real or personal Property, guaranties, leases, security agreements,
and other agreements and Property which secure or relate to any
Receivable or other Collateral, or are acquired for the purpose of
securing and enforcing any item thereof;
(j) all documents of title, policies and certificates of
insurance, securities, chattel paper and other documents and instruments
evidencing or pertaining to any and all items of Collateral;
3
(k) all files, correspondence, computer programs, tapes,
discs and related data processing software which contain information
identifying or pertaining to any Tax Refund Claim or any of the
Receivables or any Account Debtor, or showing the amounts thereof or
payments thereon or otherwise necessary or helpful in the realization
thereon or the collection thereof;
(l) any demand, time, savings, passbook, money market or like
depository account, and all certificates of deposit, maintained with a
bank, savings and loan association, credit union or like organization;
(m) all cash deposited with the Trustee or any Noteholder,
or which the Trustee, for the benefit of the Secured Creditors, or any
Noteholder, is entitled to retain or otherwise possess as collateral
pursuant to the provisions of this Agreement or any of the Security
Documents; and
(n) any and all products and proceeds of the foregoing (including
any claim to any item referred to in this definition, and any claim
against any third party for loss of, damage to or destruction of any or
all of, the Collateral or for proceeds payable under, or unearned
premiums with respect to, policies of insurance) in whatever form,
including cash, negotiable instruments and other instruments for the
payment of money, investment property, chattel paper, security
agreements and other documents.
COMPANY -- has the meaning specified in the introductory sentence
hereof.
CONTRACT RIGHTS - means any rights under contracts not yet earned
by performance and not evidenced by an instrument or chattel paper,
which contracts relate to or arise out of any of the Receivables or
Inventory.
COPYRIGHTS - means and includes, in each case whether now
existing or hereafter arising, all of each Obligor's right, title and
interest in and to: (a) all copyrights, rights and interests in
copyrights, works protectable by copyright, copyright registrations and
copyright applications; (b) all renewals of any of the foregoing; (c)
all income, royalties, damages and payments now or hereafter due and/or
payable under any of the foregoing, including damages or payments for
past or future infringements of any of the foregoing; (d) the right to
xxx for past, present and future infringements of any of the foregoing;
and (e) all rights corresponding to any of the foregoing throughout the
world.
DEFAULT -- means an event or condition the occurrence of which
would, with the lapse of time or the giving of notice or both, become an
Event of Default.
DOLLAR and $ mean freely transferable United States dollars.
DOMINION STORES -- has the meaning specified in the introductory
sentence hereof.
EFFECTIVE DATE - means May 7, 1999, or such later date upon which
this Agreement shall first become effective.
ENVIRONMENTAL PROTECTION LAW -- means any and all Federal, state,
local, and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or governmental restrictions relating to pollution
and the
4
protection of the environment or the release of any materials into the
environment, including but not limited to those related to hazardous
substances or wastes, air emissions and discharges to waste or public
systems.
EQUIPMENT - means all machinery, apparatus, equipment, motor
vehicles, tractors, trailers, rolling stock, fittings and fixtures and
other tangible personal property (other than Inventory) of every kind
and description used in the Obligors' business operations or owned by an
Obligor or in which an Obligor has an interest, and all parts,
accessories and special tools and all increases and accessions thereto
and substitutions and replacements therefor.
EVENT OF DEFAULT -- means, at any time, the occurrence and
continuance of any one or more of the following, for any reason
whatsoever (and whether such occurrence shall be voluntary or
involuntary or come about or be effected by operation of law or
otherwise):
(i) an "Event of Default" under and as defined in either
or both of the Indentures; or
(ii) a failure by any Obligor to perform or comply in any
material respect with any covenant or agreement of such Obligor
set forth in this Agreement or any other Financing Document; or
(iii) any warranty, representation or other statement by
or on behalf of any Obligor contained in any of the Financing
Documents, in any written amendment, supplement, modification or
waiver with respect to any Financing Document or in any
instrument furnished in compliance herewith or in reference
hereto, shall have been false or misleading in any material
respect when made; or
(iv) any Financing Document shall cease to be in full
force and effect or shall be declared by a court or other
Govenmental Authority of competent jurisdiction to be void,
voidable or unenforceable against any Obligor party thereto; the
validity or enforceability of any Financing Document against any
Obligor party thereto shall be contested by any Obligor or any
Affiliate thereof; or any Obligor shall deny that any one or more
of the Obligors has any further liability or obligation under any
Financing Document to which it is a party; or
(v) the failure of the Obligors, prior to June 24, 1999,
to (A) grant to the Trustee, subject to the following clauses
(B), (C), (D), (E), (F) and (G), (1) perfected first priority
Liens (subject only to prior Permitted Liens) on all of the
Noteholder Priority Collateral (as defined in the Intercreditor
Agreement) (other than leasehold interests in retail outlet
stores) in which any of the Obligors possess any right, title or
interest on and as of the Effective Date and (2) perfected Liens,
prior to all Liens other than those granted to the Agent pursuant
to the Loan Agreement, on all of the Bank Priority Collateral (as
defined in the Intercreditor Agreement) in which any of the
Obligors possess any right, title or interest on and as of the
Effective Date, (B) obtain landlord consents and lien waivers
(substantially in the form and on the terms requested by Trustee)
with respect to each of the real Properties listed on Annex 5,
(C) obtain landlord consents and lien waivers (substantially in
the form and on the terms requested by Trustee) with respect to
seven of the nine real Properties listed on Annex 6, (D) have
used their best efforts to (1) grant to the Trustee perfected
first
5
priority Liens on all of its interests in real Property located
in Jamaica and (2) obtain landlord consents and lien waivers
(substantially in the form and on the terms requested by Trustee)
with respect to such real Property, (E) obtain landlord lien
waivers (substantially in the form and on the terms requested by
Trustee) with respect to substantially all other real Properties
leased by any of the Obligors, (F) deliver to the Trustee one or
more survey maps, reasonably satisfactory in form and substance
to Trustee and prepared by a surveyor licensed in Virginia,
depicting all of the Company's real Property located in
Martinsville, Virgina, and all of the Company's real Property
located in Xxxxx County, Virginia, and cooperate with Trustee's
efforts to develop correct legal descriptions for each site
forming part of such real Property (including correction of any
errors or oversights with respect to the legal descriptions
presently attached to the Mortgages) and take all steps required
to correct or supplement the Mortgages accordingly, and (G)
comply with the obligations referred to in the last sentence of
Section 3.2(c)(ii) as the Trustee shall request in order to
perfect such Liens and protect the Trustee's interest in such
Collateral, except, in each of the foregoing cases, for such
failures that shall have been expressly waived by the Trustee in
writing.
FINANCING DOCUMENTS - means the Notes, the Indentures, this
Agreement, the Security Documents and all other documents and
instruments now or hereafter evidencing, securing or guarantying all or
any part of the Secured Obligations or otherwise governing the
responsibilities of the Obligors, or any of them, in connection with the
Secured Obligations, the Collateral or any other security for the
Secured Obligations.
FINANCING STATEMENTS -- means any and all Uniform Commercial Code
financing statements (or other similar documents), in form and substance
satisfactory to the Trustee, executed and delivered by any Obligor to
the Trustee, naming the Trustee, for the benefit of the Secured
Creditors, as secured party, and such Obligor as debtor, in connection
with this Agreement.
FIRST INDENTURE - has the meaning specified in Section 1.1.
FIRST UNION - has the meaning specified in Section 1.1.
GAAP -- means generally accepted accounting principles as in
effect from time to time in the United States of America.
GENERAL INTANGIBLES -- means all of the Obligors' now owned or
hereafter acquired general intangibles and other intangible personal
property of every kind and nature which relate to or arise out of any of
the Receivables or Inventory, including all of the following which
relate to or arise out of any of the Receivables or Inventory: all
Proprietary Rights, corporate or other business records, inventions,
designs, blueprints, plans, specifications, goodwill, computer software,
customer lists, registrations, licenses, franchises, rights and claims
against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, property, casualty or any
similar type of insurance and any proceeds thereof, and any letter of
credit, guarantee, claims, security interest or other security held by
or granted to any Obligor to secure payment by an Account Debtor of any
of the Receivables.
6
GOVERNMENTAL AUTHORITY -- means
(a) the government of
(i) the United States of America or any state or
other political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary thereof conducts all or any part of its
business, or which asserts jurisdiction over any
Properties of the Company or any Subsidiary thereof, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
INDENTURES - has the meaning specified in Section 1.2.
INTERCREDITOR AGREEMENT -- means the Intercreditor Agreement,
dated as of the date of this Agreement, between the Agent and Trustee.
INVENTORY - means all "inventory" as such term is defined in the
Uniform Commercial Code and shall include, without limitation, (a) all
goods intended for sale or lease by the Obligors, or for display or
demonstration, (b) all work in process, (c) all raw materials and other
materials and supplies of every nature and description used or which
might be used in connection with the manufacture, packing, shipping,
advertising, selling, leasing or furnishing of such goods or otherwise
used or consumed in the Obligors' business, and (d) all documents
evidencing and general intangibles relating to any of the foregoing.
LENDERS - means, at any time, all of the financial institutions
party to the Loan Agreement at such time, including their successors and
assigns.
LIEN - means, as applied to the Property of any Person: (a) any
mortgage, deed to secure debt, deed of trust, lien, pledge, charge,
lease constituting a Capitalized Lease Obligation, conditional sale or
other title retention agreement, or other security interest, security
title or encumbrance of any kind in respect of any Property of such
Person, or upon the income or profits therefrom; (b) any arrangement,
express or implied, under which any Property of such Person is
transferred, sequestered or otherwise identified for the purpose of
subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to the payment of the general, unsecured
creditors of such Person; (c) any Indebtedness which is unpaid more than
60 days after the same shall have become due and payable and which if
unpaid might by law (including bankruptcy and insolvency laws), or
otherwise, be given any priority whatsoever over the claims of general
unsecured creditors of such Person; and (d) the filing of, or any
agreement to give, any financing statement under the Uniform Commercial
Code or its equivalent in any jurisdiction, excluding informational
financing statements relating to leased property.
LOAN AGREEMENT - means the Loan and Security Agreement, dated as
of the date hereof, among the Obligors, the Lenders and the Agent, as in
effect on the date hereof.
7
LOGO ATHLETIC NOTE - means, collectively, (a) the Non-Negotiable
Subordinated Promissory Note of TKS Acquisition, Inc., dated July 15,
1998, payable to the Company in the Company in the principal amount of
$5,000,000, (b) the Non-Negotiable Subordinated Promissory Note of TKS
Acquisition, Inc., dated July 15, 1998, payable to the Company in the
Company in the principal amount of $2,500,000, (c) the Non-Negotiable
Subordinated Promissory Note of TKS Acquisition, Inc., dated July 15,
1998, payable to the Company in the Company in the principal amount of
$5,000,000.
MAJORITY NOTEHOLDERS -- means, at any time, (a) the holders of a
majority in aggregate principal amount of the "Securities" (as defined
in the First Indenture) and (b) the holders of a majority in aggregate
principal amount of the "Securities" (as defined in the Second
Indenture), in each case, excluding any such Securities held by, or
owing to, one or more of the Company, any Obligor, or any of their
respective Subsidiaries or Affiliates.
MATERIAL ADVERSE EFFECT -- means a material adverse effect on
(a) the business, operations, affairs, financial
condition, assets or properties of the Obligors, taken as a
whole, or
(b) the fair market value of the Collateral, taken as a
whole, or
(c) the ability of any Obligor to perform its material
obligations under any of the Financing Documents to which it is a
party, or
(d) the validity or enforceability of any of the Financing
Documents.
MORTGAGED REAL ESTATE -- means and includes all "Property" (as
such term is defined in each of the Mortgages) subject to the Lien in
favor of the Trustee granted pursuant to the Mortgages and (without
duplication) all of the Real Estate described on ANNEX 4, together with
all Real Estate with respect to which the Obligors are required to
deliver a Mortgage to the Trustee pursuant to Section 3.3(a).
MORTGAGES - means and includes any and all of the mortgages,
deeds of trust, deeds to secure debt, assignments and other instruments
executed and delivered by the Obligors pursuant to which the Obligors
grant to the Trustee, for the benefit of the Secured Creditors, a Lien
on all Mortgaged Real Estate, and all amendments, modifications and
supplements thereto.
0000 XXXXXXXXX - has the meaning specified in Section 1.1.
1997 INDENTURE - has the meaning specified in Section 1.2.
NOTEHOLDERS - has the meaning specified in Section 1.3.
NOTES - has the meaning specified in Section 1.3.
OBLIGORS -- has the meaning specified in the introductory
sentence hereof.
8
PATENT ASSIGNMENT -- means the Collateral Assignment and Patent
Security Agreement, dated on or about the Effective Date, made by the
Obligors to the Trustee, for the benefit of the Secured Creditors.
PATENTS -- means and includes, in each case whether now existing
or hereafter arising, all of the Obligors' right, title and interest in
and to (a) any and all patents and patent applications, (b) inventions
and improvements described and claimed therein, (c) reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof,
(d) income, royalties, damages, claims and payments now or hereafter due
and/or payable under and with respect thereto, including damages and
payments for past and future infringements thereof, (e) rights to xxx
for past, present and future infringements thereof, and (f) all rights
corresponding to any of the foregoing throughout the world.
PERMITS AND WARRANTIES -- means all permits, licenses,
manufacturer's warranties, performance guarantees, service contracts,
maintenance contracts, and other similar general intangibles which are
necessary for, or used or useful in connection with, the operation or
use of any of the Collateral or any of the Mortgaged Real Estate.
PERMITTED EQUIPMENT SALE - means a sale of Equipment of any
Obligor in an arms-length transaction, PROVIDED that: (i) the
consideration for such sale shall be at least equal to the fair market
value of the items of Equipment so sold, as determined in good faith by
the Board of Directors of such Obligor and as evidenced by a certified
resolution of such Board of Directors delivered to the Trustee on or
before the date of the transfer of title, together with an accurate and
complete copy of the agreement pursuant to which such transaction is to
be, or shall have been, consummated; and (ii) the consideration for such
sale, when combined with the consideration for all other Equipment Sales
(as hereinafter defined) consummated within the period of twelve
consecutive months immediately preceding the transfer of title of such
Equipment, shall not exceed $2,000,000 in the aggregate. As used herein,
the term "Equipment Sales" means any and all sales of Equipment and any
and all sales of like personal Property encumbered by any of the
Security Documents prior to the consummation of such sale or sales.
PERMITTED LIEN S -- means
(a) one or more Liens or security interests in favor of
the Trustee securing the Secured Obligations and
(b) other Liens that comply with the terms of all of the
Financing Documents, including Liens granted to the Agent
pursuant to the Loan Agreement, provided such Liens are
consistent in all respects with the Intercreditor Agreement.
PERSON -- means an individual, sole proprietorship, partnership,
corporation, trust, joint venture, unincorporated organization, limited
liability company or a government or agency or political subdivision
thereof.
PROPRIETARY RIGHTS -- means all of the Obligors' now owned and
hereafter arising or acquired Patents, Copyrights, and Trademarks,
including those Proprietary Rights set forth on ANNEX 3 hereto, and all
other rights under any of the foregoing, all extensions, renewals,
reissues,
9
divisions, continuations, and continuations-in-part of any of the
foregoing, and all rights to xxx for past, present and future
infringement of any of the foregoing.
PROPERTY -- means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
REAL ESTATE -- means all of the Obligors' now or hereafter owned
or leased estates in real Property, including the real Property
described on ANNEX 4.
RECEIVABLES -- means and includes, as to each Obligor, (a) any
and all rights to the payment of money or other forms of consideration
of any kind (whether classified under the Uniform Commercial Code as
accounts, contract rights, chattel paper, general intangibles, or
otherwise) including accounts receivable, letters of credit and the
right to receive payment thereunder, chattel paper, tax refunds,
insurance proceeds, Contract Rights, notes, drafts, instruments,
documents, acceptances, and all other debts, obligations and liabilities
in whatever form from any Person, but excluding the Logo Athletic Note
and the Vendor Note, (b) all guarantees, security and Liens for payment
thereof, (c) all goods, whether now owned or hereafter acquired, and
whether sold, delivered, undelivered, in transit or returned, which may
be represented by, or the sale or lease of which may have given rise to,
any such right to payment or other debt, obligation or liability, and
(d) all proceeds of any of the foregoing.
SECOND INDENTURE - has the meaning specified in Section 1.2.
SECURED CREDITORS - means, collectively, the Trustee and the
Noteholders.
SECURED OBLIGATIONS -- means and includes, in each case whether
now in existence or hereafter arising, (a) all principal, interest,
premium, if any, and other obligations of the Company and the other
Obligors under the Notes, the Indentures and the other Financing
Documents, and (b) all indebtedness, liabilities, obligations, covenants
and duties of the Obligors to any one or more of the Secured Creditors
of every kind, nature and description arising under or in respect of
this Agreement, the Notes or any of the other Financing Documents,
whether direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note, and whether or not for the payment of money,
including, without limitation, fees required to be paid and expenses
required to be paid or reimbursed, indemnities, and any other amounts
whatsoever.
SECURITY DOCUMENTS - means this Agreement, the Financing
Statements, the Patent Assignment, the Trademark Assignment, the
Mortgages, and each other writing executed and delivered by any one or
more of the Obligors securing the Secured Obligations.
SUBSIDIARY GRANTOR -- has the meaning specified in the
introductory sentence hereof.
SWEATJET - has the meaning specified in the introductory sentence
hereof.
TAX REFUND CLAIMS - means all tax refund claims and all rights
with respect thereto, including all rights to settle or compromise the
amount of such claims, to file amendments and other documents with
respect thereto, and to receive the proceeds thereof.
10
TRADEMARK ASSIGNMENT -- means the Conditional Assignment and
Trademark Security Agreement, dated on or about the Effective Date,
entered into by the Trustee with the Obligors.
TRADEMARKS - means and includes, in each case whether now
existing or hereafter arising, all of the Obligors' right, title and
interest in and to (a) trademarks (including service marks), trade names
and trade styles and the registrations and applications for registration
thereof and the goodwill of the business symbolized by the trademarks,
(b) licenses of the foregoing, whether as licensee or licensor, (c)
renewals thereof, (d) income, royalties, damages and payments now or
hereafter due and/or payable with respect thereto, including damages,
claims and payments for past and future infringements thereof, (e)
rights to xxx for past, present and future infringements thereof,
including the right to settle suits involving claims and demands for
royalties owing, and (f) all rights corresponding to any of the
foregoing throughout the world.
TRUSTEE -- has the meaning set forth in the introductory sentence
hereof.
TULTEX CANADA -- has the meaning specified in the introductory
sentence hereof.
TULTEX INTERNATIONAL -- has the meaning specified in the
introductory sentence hereof.
TULTEX MASSACHUSETTS -- has the meaning specified in the
introductory sentence hereof.
TULTEX VIRGINIA -- has the meaning specified in the introductory
sentence hereof.
UNIFORM COMMERCIAL CODE --means the Uniform Commercial Code as in
effect from time to time in any specified or applicable jurisdiction.
US BANK -- has the meaning specified in the introductory sentence
hereof.
VENDOR NOTE - means, collectively, (a) a promissory note dated
July 1, 1997 of Textiles Arco, S.A. de C.V., as amended, payable to the
Company in the amount of $198,000 as of April 3, 1999, and (b) the
contract obligations due from [OMSA] and related parties under the
agreement dated October 11, 1995, as amended on July 1, 1997, payable to
the Company in the amount of $4,354,000 as of April 3, 1999.
2.2 SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION, ETC.
(A) SECTION HEADINGS AND TABLE OF CONTENTS, ETC. The
titles of the Sections of this Agreement and the Table of
Contents of this Agreement appear as a matter of convenience
only, do not constitute a part hereof and shall not affect the
construction hereof. The words "herein," "hereof," "hereunder"
and "hereto" refer to this Agreement as a whole and not to any
particular Section or other subdivision. References to Sections
are, unless otherwise specified, references to Sections of this
Agreement. References to Annexes, Schedules, Exhibits and
Attachments are, unless otherwise specified, references to
Annexes, Schedules, Exhibits and Attachments attached to this
Agreement.
(B) CONSTRUCTION. Each covenant contained herein shall be
construed (absent an express contrary provision herein) as being
independent of each other covenant contained
11
herein, and compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
(C) OTHER TERMS AND RULES OF CONSTRUCTION.
(i) The terms "accounts," "chattel paper,"
"contract rights," "documents," "equipment,"
"instruments," "general intangibles," "investment
property" and "inventory," as and when used in the lower
case in this Agree ment (and not as a capitalized term) or
the other Security Documents, shall have the meanings
given those terms in the Uniform Commercial Code.
(ii) Unless otherwise specified, the word
"including" means "including but not limited to".
(iii) References to any legislation or statute or
code, or to any provisions of any legislation or statute
or code, shall include any modification or reenactment of,
or any legislative, statutory or code provision
substituted for, such legislation, statute or code or
provision thereof.
(iv) Unless otherwise specified with respect
thereto, references to any document or agreement
(including this Agreement) shall include references to
such document or agreement as amended, novated,
supplemented, modified or replaced from time to time, so
long as and to the extent that such amendment, novation,
supplement, modification or replacement is either not
prohibited by the terms of any Financing Document or is
consented to by the Majority Noteholders and the Trustee.
(v) References to any Person include its successor
or permitted substitutes and assigns.
2.3 SEPARATE AGREEMENTS.
Notwithstanding that this Agreement is among each of the Obligors
and the Trustee, this Agreement shall be construed and interpreted as a
separate Agreement between each Obligor, respectively, and the Trustee,
and any whole or partial invalidity of this Agreement in respect of any
Obligor shall not have any effect on the validity or enforceability of
this Agreement as among each other Obligor, respectively, as the case
may be, and the Trustee.
2.4 PARTIAL INVALIDITY.
The unenforceability or invalidity of any provision or provisions
of this Agreement shall not render any other provision or provisions
contained in this Agreement unenforceable or invalid.
2.5 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT
THE PERFECTION OF THE LIENS IN AND TO THE
12
COLLATERAL ARE GOVERNED BY THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
3. COLLATERAL
3.1 GRANT OF SECURITY INTEREST.
(a) To secure the payment, observance and performance of
the Secured Obligations, each Obligor hereby mortgages, pledges
and assigns all of its right, title and interest in and to the
Collateral to the Trustee, for the benefit of the Secured
Creditors, and grants to the Trustee, for the benefit of the
Secured Creditors, a continuing security interest in, and a
continuing Lien upon, all of its right, title and interest in and
to the Collateral.
(b) As additional security for all of the Secured
Obligations, each Obligor grants to the Trustee and the
Noteholders, for the benefit of the Trustee and the Noteholders,
a security interest in, and assigns to the Trustee and the
Noteholders, for the benefit of the Trustee and the Noteholders,
all of such Obligor's right, title and interest in and to, any
deposits or other sums at any time credited by or due from the
Trustee and each Noteholder to such Obligor, or credited by or
due from any participant of any Noteholder to such Obligor, with
the same rights therein as if the deposits or other sums were
credited by or due from such Noteholder. Each Obligor hereby
authorizes the Trustee and each Noteholder to pay or deliver to
the Trustee, for the account of the Trustee and the Noteholders,
without any necessity on the Trustee's or any Noteholder's part
to resort to other security or sources of reimbursement for the
Secured Obligations, at any time during the continuation of any
Event of Default or in the event that the Trustee, on behalf of
the Secured Creditors, should make demand for payment under any
Financing Document and without further notice to any Obligor
(such notice being expressly waived), any of the aforesaid
deposits (general or special, time or demand, provisional or
final) or other sums for application to any Secured Obligation,
irrespective of whether any demand has been made or whether such
Secured Obligation is mature, and the rights given the Trustee
and the Noteholders hereunder and under each other Financing
Document are cumulative with such Person's other rights and
remedies, including other rights of setoff. The Company will
promptly notify the Trustee of its receipt of any such funds for
application to the Secured Obligations, but failure to do so will
not affect the validity or enforceability thereof. The Trustee
may give notice of the above grant of a security interest in and
assignment of the aforesaid deposits and other sums, and
authorization, to, and make any suitable arrangements with, any
Noteholder for effectuation thereof, and each Obligor hereby
irrevocably appoints the Trustee as its attorney to collect any
and all such deposits or other sums to the extent any such
payment is not made to the Trustee or any Noteholder by such
Noteholder.
3.2 COLLATERAL-RELATED RIGHTS AND UNDERTAKINGS.
(A) CHIEF EXECUTIVE OFFICE; NOTICE OF CHANGES OF ADDRESS
OR NAME. Each of the Obligors hereby represents, warrants and
covenants to the Trustee that,
(1) the chief executive office of each of the
Obligors (and the office where all of the Books and
Records of each of the Obligors are maintained) is located
at the applicable address set forth on ANNEX 1, and
13
(2) the Inventory and Equipment currently owned by
such Obligor is physically located at the address or
addresses set forth on ANNEX 2.
None of the Obligors shall
(1) change the address of such chief
executive office, or merge or consolidate with any
Person or change its name, or
(2) change the specified locations of such
Inventory (other than pursuant to sales of such
Inventory in the normal course of business) and
Equipment,
unless such Obligor shall have given thirty (30) days prior
written notice thereof to the Trustee.
(B) OWNERSHIP OF COLLATERAL; LIEN OF THE TRUSTEE; TAXES.
Each of the Obligors hereby represents, warrants and covenants to
the Trustee that the Collateral granted by each Obligor hereunder
is now, and at all times shall be, solely owned by such Obligor
free and clear of all Liens, security interests, claims and
encumbrances, except Permitted Liens. Each of the Obligors hereby
represents, warrants and covenants to the Trustee that the
security interests of the Trustee in the Collateral are now, and
shall at all times be, valid, perfected, first priority security
interests in the Noteholder Priority Collateral (as defined in
the Intercreditor Agreement) and perfected Liens, prior to all
Liens other than those granted to the Agent pursuant to the Loan
Agreement, on all of the Bank Priority Collateral (as defined in
the Intercreditor Agreement), in all cases subject only to
Permitted Liens. Each of the Obligors shall defend the Collateral
from all claims and demands of all other Persons, except the
holders of Permitted Liens. Each of the Obligors shall comply
with the requirements of all state and federal laws, rules and
regulations in order to grant the security interests herein
granted in and to the Collateral, to maintain the perfection and
priority of such security interests and to permit the Trustee to
realize promptly and directly on such Collateral, as provided
herein. Each of the Obligors shall pay all taxes, assessments and
other claims lawfully levied or assessed on any of the
Collateral, except to the extent that such taxes, assessments and
other claims constitute Permitted Liens.
(C) FINANCING STATEMENTS; FURTHER ASSURANCES
(i) Each of the Obligors hereby agrees to execute
such financing statements
(A) as may be requested by the Trustee or
the Noteholders on or prior to the Effective Date,
and
(B) as the Trustee or the Majority
Noteholders may from time to time request, and
(C) at all times take such action
(including, without limitation, the preparation and
filing, at its own expense, of all continuation
14
statements) as may be required to perfect
(including in respect of after-acquired Property in
the nature of Collateral) and to keep continuously
perfected the Trustee's security interest and Lien
in the Collateral.
The Trustee is hereby authorized by each of the Obligors
to execute and file any such financing statements and
continuation statements on such Obligor's behalf, unless
prohibited by law, and, if such Obligor fails to make such
filings within five (5) days of any request therefor by
the Trustee, the Trustee shall make such filings subject
to the provisions hereof.
(ii) Each of the Obligors shall, at its sole cost
and expense, perform all acts and execute all documents
reasonably requested by the Trustee or the Majority
Noteholders from time to time to evidence, perfect,
preserve the priority of, maintain or enforce the
Trustee's security interests granted herein or otherwise
in furtherance of the provisions of this Agreement. At any
time and from time to time, each of the Obligors shall, at
its sole cost and expense, execute and deliver to the
Trustee such financing statements pursuant to the Uniform
Commercial Code or other applicable law of any applicable
jurisdiction, and shall execute, acknowledge, deliver and
record, or will cause to be executed, acknowledged,
delivered or recorded, all such further instruments,
deeds, conveyances, mortgages, supplemental indentures,
transfers, continuation statements and assurances as are
necessary or reasonably appropriate to perfect, preserve,
protect, continue and maintain the perfection and priority
of the Lien of the Trustee in and to the Collateral or, as
the Trustee may reasonably require, for the better
granting, bargaining, selling, remising, releasing,
confirming, conveying, warranting, assigning,
transferring, mortgaging, pledging, delivering and setting
over to the Trustee every part of such security, or as may
be required in order to transfer to any successor trustee
or trustees the estate, powers, instruments and funds held
in trust hereunder. Each of the Obligors hereby authorizes
the Trustee to execute and file at any time and from time
to time one or more financing statements or copies thereof
or of this Agreement (and any continuation statements in
respect thereof) with respect to the Collateral signed
only by Trustee. In particular, and without limiting the
generality of this clause (ii), (A) each of the Obligors
shall comply with the foregoing provisions of this clause
(ii) with respect to (I) any and all of its Property
located in any one or more of Canada and Mexico, and (II)
any and all of its Property consisting of motor vehicles,
and (B) the Company shall comply, prior to June 24, 1999,
with the obligations described in clause (v) of the
definition of "Event of Default" set forth herein.
(D) SALE OF COLLATERAL. No Obligor shall assign, sell,
transfer, or otherwise dispose of, nor shall any Obligor suffer
or permit any of the same to occur with respect to, any
Collateral other than
(i) in respect of the sale of Inventory in the
ordinary course of business,
(ii) (A) as otherwise permitted under each of the
Financing Documents and (B) Equipment which is disposed of
in a Permitted Equipment Sale,
15
(iii) in respect of the collection of checks,
drafts, money orders or other instruments in respect of
the Receivables as contemplated by Section 3.2(i)(ii), or
(iv) with the prior written consent of the Majority
Noteholders.
The foregoing notwithstanding and notwithstanding anything to the
contrary in the Financing Documents, the Majority Noteholders
may, in their sole discretion, withdraw the aforesaid permissions
to assign, sell, transfer or otherwise dispose of Inventory upon
the occurrence and continuance of any Event of Default.
(E) ACCESS TO COLLATERAL; MAINTENANCE OF BOOKS AND
RECORDS. The Trustee shall at all times have free access to and
right of inspection of the Collateral and any records pertaining
thereto (and the right to make extracts from and to receive from
the Obligors originals or true copies of such records and any
papers and instruments relating to any Collateral upon request
therefor at reasonable times and as reasonably requested). Each
of the Obligors shall maintain the Books and Records and such
other records as will enable it and the Trustee to accurately
determine the status of the Collateral in a prompt manner. All of
the Books and Records and such other records shall be maintained
at the respective addresses set forth on ANNEX 1 until such time
as any Obligor shall be permitted to change such location in
accordance with this Section 3.2.
(F) USE OF EQUIPMENT; NOTICES REGARDING CHANGES IN
EQUIPMENT.
(i) Each of the Obligors hereby represents,
warrants and covenants to the Trustee that all of the
Equipment is used in the business of such Obligor (and not
for personal, family, household or farming use) for lawful
purposes only and in compliance in all material respects
with all laws, rules and governmental regulations relating
thereto.
(ii) Each Obligor will, at such Obligor's sole
expense, keep each item of Equipment (other than obsolete
Equipment) in functional condition and repair, running and
marketable condition.
(iii) The Obligors shall promptly (and in any event
within ten (10) Business Days) advise the Trustee and the
Noteholders in sufficient detail of any substantial change
relating to the type, quantity, quality or location of the
Equipment or any event which would have a material adverse
effect on the value of the Equipment.
(G) [INTENTIONALLY DELETED].
16
(H) INSURANCE.
(i) Anything contained in the other Financing
Documents notwithstanding, the Obligors agree to maintain
insurance, with financially sound and reputable insurers,
with respect to the Inventory and any returned,
repossessed or reclaimed tangible personal Property
included in the Collateral against casualties,
contingencies, hazards and such other risks (including,
without limitation,
(A) fire, hurricane, tornado, wind damage,
and such other risks insured against by a standard
all-risk property and fire insurance policy and
endorsement for extended coverage and
(B) flood, earthquake and public
disturbance insurance)
and in such amounts (and with such reasonable deductibles)
as shall be customary in the case of corporations of
established reputations engaged in the same or a similar
business and similarly situated (it being understood that
the deductibles in respect of such insurance on the
Effective Date shall be deemed to be reasonable for the
purposes hereof). The Obligors shall deliver copies of the
policies of such insurance to the Trustee, with
satisfactory lender's loss payable endorsements naming the
Trustee as loss payee to the extent of its interest and as
such interest may appear. Each such policy of insurance or
endorsement shall contain a clause requiring the insurer
to give not less than thirty (30) days prior written
notice to the Trustee in the event of cancellation of the
policy for any reason whatsoever and a clause that the
interest of the Trustee shall not be impaired or
invalidated by any act or neglect of any Obligor. If the
Obligors shall fail to provide and pay for such insurance,
or have the same provided and paid for, the Trustee, upon
being instructed by the Majority Noteholders, may, at the
sole expense of the Obligors, procure the same, but may
not be required by the Obligors to do so. Each of the
Obligors agrees to deliver to the Trustee, promptly as
rendered, true copies of all material reports made in any
reporting form to insurance companies.
(ii) Anything contained in the other Financing
Documents notwithstanding, each Obligor shall maintain or
caused to be maintained insurance, with financially sound
and reputable insurers, with respect to its Property
(including, without limitation, the Collateral) and
business covering any public and/or product liability of
any Obligor, or its officers, agents or employees, and in
such amounts as shall be customary in the case of
corporations of established reputations engaged in the
same or a similar business and similarly situated. The
Trustee and each of the Noteholders shall be named as a
co-insured on such policies. The Obligors shall deliver to
the Trustee on the Closing Date evidence of insurance of
the type and in the amounts provided for in this Section
3.2(h)(ii) being in full force and effect and payment of
all premiums in respect thereof.
(I) COLLECTION OF RECEIVABLES, ETC. Anything herein to the
contrary notwithstanding, but subject in all cases to the
provisions of the Intercreditor Agreement:
17
(i) each of the Obligors shall remain responsible
and liable to perform all of its duties and obligations
under or in respect of each of the Receivables;
(ii) until such time as the Trustee shall have
informed any of the Obligors to the contrary, the Obligors
shall remain obligated to collect, and account for all
proceeds in respect of, the Receivables and shall do so
diligently and in accordance with reasonable commercial
procedures and practices for similarly situated
corporations and shall be entitled to retain and use such
proceeds, and, if an Event of Default shall exist and if
so instructed by the Trustee, each of the Obligors shall
deliver all such proceeds to the Trustee, or as directed
by the Trustee, for application to the Secured Obligations
and the obligations secured by the Permitted Liens; and
(iii) the execution and delivery of this Agreement,
and the granting of the security interests in and to the
Collateral, shall not subject the Trustee or any holder of
the Secured Obligations to, or transfer or pass to such
Persons, or in any way affect or modify, the liability of
the Obligors under any or all of their respective
Receivables or any obligations of the Obligors in
connection therewith, it being understood and agreed that
notwithstanding this Agreement, and the granting of the
security interests in and to the Collateral, all of the
obligations of each of the Obligors to each and every
other party under each and every one of the Receivables
shall be and remain enforceable by such other party, its
successors and assigns, only against the Obligors, and the
Trustee and each holder of Secured Obligations have not
assumed any of the obligations or duties of any of the
Obligors thereunder or in connection therewith.
(J) INDEMNIFICATION. Each of the Obligors hereby agrees to
indemnify each of the Trustee and each holder of Secured
Obligations, and hold each such Person harmless, from any and all
liability, loss or damage which any such Person may or might
incur by reason of any and all claims and demands whatsoever
which may be asserted against any such Person arising out of, as
a result of, or otherwise connected with, the security interests
hereby granted to the Trustee by the Obligors under or in respect
of any of the Collateral by reason of
(i) the failure by any of the Obligors to perform
any alleged obligations or undertakings required to be
performed by such Obligor, as the case may be, under or in
connection with the Collateral (including, without
limitation, the failure of any warranty or representation
(express or implied) in respect of the sale of any
Inventory),
(ii) any failure by any of the Obligors, in
connection with any of the Collateral, to comply with any
applicable federal, state or local law and the rules and
regulations promulgated thereunder and
(iii) any bodily injury, death or property damage
occurring in connection with the sale, lease or use of the
Collateral.
(K) CERTAIN RIGHTS OF TRUSTEE.
18
(i) Neither the Trustee nor any holder of Secured
Obligations shall be obligated to, or be responsible for,
the payment of any of the amounts or sums referred to in
this Section 3.2 or the other performance of any of the
undertakings of the Obligors hereunder. Each of the
Obligors hereby agrees and acknowledges that neither the
acceptance of this Agreement by the Trustee nor the
exercise of, or failure to exercise, any right, power or
remedy in this Agreement conferred upon the Trustee shall
be deemed or construed to obligate the Trustee or any
holder of Secured Obligations to pay any sum of money,
take any other action or incur any liability in connection
with, or collect or realize upon, any of the Collateral.
It is further agreed and understood by each of the
Obligors that the Trustee and the Noteholders shall not be
liable in any way for any cost, expense or liability
connected with, or any charge or liability arising from,
any of the Collateral. All insurance expenses, all
expenses of protecting, storing, warehousing, insuring,
handling, maintaining and shipping the Collateral, and any
and all excise, property, sales, use and other taxes
imposed by any state, federal or local authority on
any of the Collateral or in respect of the sale or other
disposal thereof shall be borne and paid by the Obligors.
(ii) If any of the Obligors shall fail to pay any
of the aforesaid expenses and taxes, the Trustee may, at
the instruction of the Majority Noteholders and at such
Obligor's expense, pay the same, and any such payment
shall be deemed an advance by the Trustee to such Obligor
payable on demand together with interest at the highest
rate then payable on any of the Secured Obligations. If
any of the Obligors shall fail to perform any of its other
undertakings or agreements or obligations under this
Agreement, the Trustee may (but shall not be required to)
itself perform, or cause performance of, such undertaking,
agreement or obligation, and the expenses of the Trustee
incurred in connection therewith shall be payable by such
Obligor on demand together with interest at the highest
rate then payable on any of the Secured Obligations and
shall otherwise be treated as a Secured Obligation
hereunder.
(iii) If, by reason of any suit or proceeding of
any kind, nature or description against any of the
Obligors, or by any Obligor or any other party against any
other Person, which in the Trustee's sole discretion makes
it advisable for the Trustee to seek counsel for the
protection and preservation of the Collateral, or to
defend its own interest or the interests of the
Noteholders, such out-of-pocket expenses and reasonable
counsel fees shall be allowed to the Trustee and borne and
paid by such Obligor.
(L) NO LIABILITY FOR SAFEKEEPING. Except to the extent
specifically limited by applicable law, the Trustee shall not be
liable or responsible in any way for the safekeeping of the
Collateral or for any loss or damage thereto or for any
diminution in the value thereof, or any act or default of any
warehouseman, carrier, forwarding agency or other Person, but the
same shall be at the sole risk of the Obligor owning such
Collateral.
(M) NO VIOLATION OF LAW. No Obligor shall
19
(i) violate any law, ordinance or governmental rule
or regulation (including, without limitation, any
Environmental Protection Laws) to which it or the
Collateral is subject (except to the extent being
contested in good faith by appropriate proceedings and for
which reserves in respect of such Obligor's reasonably
anticipated liability therefor have been established), nor
(ii) fail to obtain any license, permit, franchise
or other governmental authorization necessary to the
ownership of the Collateral, the sale or lease of the
Inventory, the collection of the Receivables, or the
operation of the Equipment,
which violation or failure to obtain might have a Material
Adverse Effect.
(N) FURTHER ASSIGNMENTS; MARKING OF COLLATERAL. Each of
the Obligors shall deliver to the Trustee, at such times and in
such form as may be reasonably designated by the Trustee or the
Majority Noteholders from time to time, assignments, reports and
schedules relating to the Collateral. Upon request by the Trustee
or the Majority Noteholders, each of the Obligors shall xxxx its
books and records to reflect the security interests of the
Trustee in the Collateral.
(O) PERMITS AND WARRANTIES. To further protect the
security afforded by this Agreement with respect to the Permits
and Warranties, each Obligor agrees:
(i) to faithfully abide by, perform and discharge
in all material respects each and every obligation,
covenant, condition, duty and agreement which each or any
of the Permits and Warranties provides are to be performed
by such Obligor;
(ii) not to amend, assign, modify, cancel,
surrender, otherwise change or terminate any of the
Permits and Warranties, or waive any provision thereof in
any manner that would materially affect the security
interest of the Trustee in the Permits and Warranties,
without the written consent of the Trustee and the
Majority Noteholders, except to the extent that such
actions would not, individually or in the aggregate, have
a Material Adverse Effect; and
(iii) to appear in and defend any action or
proceeding to the extent deemed necessary in its
reasonable business judgment arising under, growing out of
or in any manner connected with the obligations,
covenants, conditions, duties, agreements or liabilities
of such Obligor under any of the Permits and Warranties,
at the sole cost and expense of such Obligor.
3.3 COVENANT REGARDING ADDITIONAL REAL ESTATE AND LEASES.
(A) REAL ESTATE. Promptly upon any Obligor's acquisition
of any fee or leasehold interest in any Real Estate, such Obligor
shall deliver to the Trustee, for the benefit of the Secured
Creditors, an executed Mortgage in form and substance
satisfactory to the Trustee and the Majority Noteholders,
conveying to the Trustee, for the benefit of the Secured
Creditors, a first priority Lien on such Real Estate.
20
(b) LEASES. Promptly upon any Obligor's entry into any
lease of Real Estate, such Obligor shall use its best efforts to
deliver to the Trustee an executed landlord's agreement, release,
subordination or waiver with respect to such lease in form and
substance satisfactory to the Trustee and the Majority
Noteholders.
3.4 COVENANT REGARDING PROPRIETARY RIGHTS.
Each Obligor shall take all action necessary or desirable, or
that the Trustee may reasonably request, in order to obtain, after the
Effective Date, sublicense agreements from licensors of Proprietary
Rights to such Obligor, in each case, in form and substance
satisfactory to the Trustee and the Majority Noteholders, except, in
each case, to the extent the foregoing requirements are otherwise
expressly waived by the Agent.
3.5 COVENANT REGARDING NOTICES TO THE AGENT.
Each Obligor shall deliver to the Trustee, contemporaneously with
the delivery thereof to the Agent or any Lender, copies of any
statement, report or certificate furnished to the Agent to the extent
that the information contained in such statement, report or certificate
has not already been delivered to the Trustee.
3.6 ASSIGNMENT OF CLAIMS ACT.
Subject to the Intercreditor Agreement, upon the request of the
Trustee, the Obligors (or any of them) shall execute any documents or
instruments and shall take such steps or actions reasonably required by
the Trustee so that all monies due or to become due under any contract
with the United States of America, the District of Columbia or any
state, county, municipality or other domestic or foreign governmental
entity, or any department, agency or instrumentality thereof, will be
assigned to the Trustee, for the benefit of the Secured Creditors, and
notice given in respect thereof in accordance with the Assignment of
Claims Act of 1940, as amended, or any other law, rules or regulations
relating to the assignment of any such contract or monies due or to
become due.
4. REPRESENTATIONS AND WARRANTIES
Each Obligor represents and warrants, as of the Effective Date,
as follows:
4.1 OWNERSHIP OF COLLATERAL.
The Collateral being granted by such Obligor is owned solely by
such Obligor, and no other Person has any right, title, interest, claim
or Lien thereon, or thereto, except for Permitted Liens.
4.2 INCORPORATION.
Such Obligor:
(a) is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation as set forth in the introductory sentence hereof;
21
(b) has all corporate power and authority necessary to own
and operate its Properties and to carry on its business as now
conducted and as presently proposed to be conducted;
(c) has all licenses, certificates, permits, franchises
and other governmental authorizations necessary to own and
operate its Properties and to carry on its business as now
conducted and as presently proposed to be conducted, except where
the failure to have such licenses, certificates, permits,
franchises and other governmental authorizations, in the
aggregate for all such failures, could not have a Material
Adverse Effect; and
(d) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing, as a foreign
corporation, in each state in the United States of America and in
each other jurisdiction where the failure to be so qualified or
licensed and authorized and in good standing, in the aggregate
for all such failures, could have a Material Adverse Effect.
4.3 CORPORATE POWERS AND AUTHORIZATION.
The execution, delivery and performance by such Obligor of this
Agreement and all other instruments and documents to be delivered
hereunder, and the transactions contemplated hereby and thereby, are
within the corporate powers of such Obligor, have been duly authorized
by all necessary corporate action and
(a) do not contravene such Obligor's certificate or
articles of incorporation or bylaws or, to such Obligor's
knowledge, any law, rule, regulation, order, writ, judgment,
injunction or decree presently in effect having applicability to
it,
(b) do not contravene any indenture, loan or credit
agreement or any other material agreement, lease or instrument
(1) to which such Obligor is a party or
(2) by which such Obligor or its Property may be
bound or affected, and
(c) do not result in or require the creation of any Lien,
security interest or other charge or encumbrance upon or with
respect to any of its Properties (except as provided herein).
4.4 GOVERNMENTAL FILINGS; REGISTRATION.
(A) FILINGS AND REGISTRATIONS. No authorization or
approval or other action by, and no notice to or filing with, any
Governmental Authority is required for
(i) the grant by each Obligor of the security
interest granted hereby or the due execution, delivery and
performance by such Obligor of this Agreement or any other
document or instrument to be delivered hereunder, or
22
(ii) the perfection of such security interest or
the exercise by the Trustee of its rights and remedies
hereunder and under the other Financing Documents,
except for the filings of the Uniform Commercial Code financing
statements and filings under other applicable foreign laws, in
each case filed to perfect the Liens created hereby on the
Collateral, and filings with the United States Patent and
Trademark Office required by the Trademark Assignment and the
Patent Assignment, all of which shall be duly made on or
immediately after the Effective Date and will, upon the filing
thereof, be in full force and effect.
(B) NO OTHER FINANCING STATEMENTS. No effective financing
statement which names any Obligor as debtor is on file in any
jurisdiction except for the financing statements in respect of
Permitted Liens.
4.5 ENFORCEABILITY.
All acts and proceedings required by law and by the certificate
or articles of incorporation and bylaws of such Obligor necessary to
constitute this Agreement a valid and binding agreement for the uses and
purposes set forth herein, in accordance with its terms, have been done
and taken. Assuming the corporate existence, power and authority of, and
the due authorization, execution and delivery hereof by, the Trustee,
this Agreement is the legal, valid and binding obligation of such
Obligor, enforceable in accordance with its terms, except as the
enforceability hereof may be
(a) limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally and
(b) subject to the availability of equitable remedies and
judicial discretion in the enforcement thereof.
4.6 LOCATION OF INVENTORY AND EQUIPMENT, ETC.
(A) LOCATION OF INVENTORY AND EQUIPMENT. Such Obligor does
not currently hold, nor has such Obligor held at any time during
the four months immediately preceding the date hereof, any
interest in tangible personal Property constituting a part of the
Collateral which is located in any location other than the
locations listed on ANNEX 2.
(B) CHANGES OF NAME AND ADDRESSES. Such Obligor has not,
in the last five (5) years,
(i) changed its name or operated all or a portion
of its business under any name other than its present
legal name, except as otherwise stated on ANNEX 1, or
(ii) changed the address of its chief executive
office other than as set forth on ANNEX 1.
4.7 PROPRIETARY RIGHTS.
23
Such Obligor owns or possesses all Proprietary Rights necessary
for the present and presently planned future conduct of its business,
without any known conflict with the rights of others. All patents owned
by such Obligor and all of the trademarks, service marks or trade names
found on, or used in connection with the sale, lease or other
disposition of, Inventory are set forth on Annex 3.
4.8 RECEIVABLES.
(a) The Receivables evidenced by promissory notes or other
instruments do not in the aggregate exceed $1,100,000 in amount.
(b) Each of the Receivables is a true and correct
statement of the actual amount owing by each Account Debtor with
respect thereto.
4.9 REAL PROPERTY.
None of the Obligors nor any of their respective Subsidiaries
owns any Real Estate or leases any Real Estate other than as described
on ANNEX 4.
4.10 YEAR 2000 COMPLIANCE.
Each Obligor (i) has initiated a review and assessment of all
areas within its and each of its Subsidiaries' business and operations
(including those affected by suppliers, vendors and customers) that
could be adversely affected by the "Year 2000 Problem" (that is, the
risk that computer applications used by such Obligor or any of its
Subsidiaries (or suppliers, vendors and customers) may be unable to
recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii) has
developed a plan and timeline for addressing the Year 2000 Problem on a
timely basis, and (iii) to date, implemented that plan in accordance
with that timetable. Based on the foregoing, each Obligor believes that
all computer applications (including those of its suppliers, vendors and
customers) that are material to its or any of its Subsidiaries' business
and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and after
January 1, 2000.
4.11 ACCURACY OF PRELIMINARY STATEMENTS.
Each statement contained in Section 1 of this Agreement is
accurate.
5. DEFAULTS -- REMEDIES
5.1 DEFAULT REMEDIES.
(A) GENERAL. If an Event of Default exists, the Trustee
may
(i) exercise all of the rights and remedies
conferred in this Agreement, in the Indenture and in the
other Financing Documents, and
24
(ii) exercise all of the rights and remedies of a
secured party under the Uniform Commerical Code and all of
the rights and remedies in this Agreement or otherwise
available at law or in equity.
(B) RIGHTS AND REMEDIES.
(I) PAYMENTS TO LOCKBOX. If an Event of Default
exists, the Trustee may require the Obligors to instruct
the Account Debtors to make payment thereof directly to
the Trustee or to a Person or lockbox so designated by the
Trustee. If an Event of Default shall exist and any
Obligor receives any cash, checks, drafts, money orders or
other instruments in payment of any Receivables, it shall
hold the same in trust for the Trustee and shall segregate
the same and shall promptly deliver the same (in the
identical form as received) to the Trustee or to such
Person or lockbox as the Trustee may designate.
(II) NOTIFICATION OF DEBTORS. If an Event of
Default shall exist, each of the Obligors authorizes the
Trustee (but the Trustee shall not be obligated) to
communicate with any Account Debtor or any other Person
primarily or secondarily liable under a Receivable with
regard to any delinquent payment or other payment status
of such Receivable or any matter relating thereto or with
regard to the verification that such Account Debtor did
incur the obligations thereunder and the terms and
provisions thereof. If an Event of Default exists, each of
the Obligors agrees, upon the request of the Trustee, to
notify each Account Debtor in writing of the assignment to
the Trustee of its respective Receivables, the Trustee's
security interest therein and any other matter relating
thereto. Notwithstanding the immediately preceding
sentence, the Trustee shall, during the existence of any
Event of Default, have the right, without first making a
request of the Obligor owning such Receivable, to notify
each Account Debtor of the assignment to the Trustee of
its respective Receivable, the Trustee's security interest
therein and any other matter relating thereto.
(C) COLLECTION. The Trustee may, at any time and from time
to time during the existence of any Event of Default, demand, xxx
for, collect or receive any money or Property at any time payable
or receivable on account of or in exchange for, or make any
compromise or settlement reasonably deemed desirable by the
Trustee with respect to, any Receivable, and/or extend the time
of payment, arrange for payment in installments, or otherwise
modify the terms of, or release, any Receivable or any
collateral, guaranty or insurance therefor or in respect thereof,
all without notice to or consent by the Obligors and without
otherwise discharging or affecting the Secured Obligations, the
other Collateral or the security interest granted herein. Without
limiting any of the foregoing, each of the Obligors hereby
authorizes the Trustee and any agent or designee thereof during
the existence of any Event of Default to take any and all steps
in the name of such Obligor, necessary or desirable, in the
determination of the Trustee or the Majority Noteholders, to
collect all amounts due under any and all Receivables, including,
without limitation, endorsing such Obligor's name on checks and
other instruments representing collections and/or proceeds of
Receivables and enforcing such Receivables.
25
(D) POSSESSION OF COLLATERAL; ENTRY OF PREMISES. If an
Event of Default exists, the Trustee shall have the right, at any
time or from time to time, to take immediate possession of any or
all Collateral that is tangible personal Property, and may
require each of the Obligors to assemble such Collateral, at the
expense of each such Obligor, and to make it available to the
Trustee at a place to be designated by the Trustee that is
reasonably convenient to both parties, and may enter any of the
premises of each of the Obligors (or wherever such Collateral
shall be located) without force and with or without process of
law, and keep and store the same on such premises until sold (and
if such premises be the Property of any Obligor, such Obligor
agrees not to charge the Trustee for storage thereof for a period
of at least ninety (90) days after sale or disposition of such
Collateral).
(E) BOOKS AND RECORDS. At the request of the Trustee at
any time while an Event of Default exists, each of the Obligors
shall assemble all of the Books and Records which evidence the
Collateral and make the same available to the Trustee or its
designee at a place selected by the Trustee or its designee.
(F) SALE OF COLLATERAL; COMMERCIAL REASONABLENESS. Each of
the Obligors and the Trustee agree that ten (10) days notice to
such Obligor of any public or private sale or other disposition
of the Collateral shall be reasonable notice thereof, and such
sale shall be at such reasonable location as the Trustee shall
designate in such notice. Any other requirement of notice, demand
or advertisement for sale is, to the extent permitted by law,
waived by each of the Obligors. Sales for cash, or on credit to a
wholesaler, retailer or user of the Collateral, at any public or
private sale are all hereby deemed (without limitation) to be
commercially reasonable (as defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction). The Collateral
may be sold at any private or public sale in one or more lots.
The Trustee shall have, to the extent permitted by applicable
law, the right to bid at any such public sale on behalf of any
one or more Noteholders (who shall also have the right to bid
individually).
(G) CERTAIN OFFSET RIGHTS IN RESPECT OF COLLATERAL. If an
Event of Default exists, the Trustee may also, with or without
proceeding with sale or foreclosure or demanding payment of the
Secured Obligations, without notice, appropriate and apply to the
payment of the Secured Obligations and the other obligations
secured under this Agreement any and all Collateral in its
possession (including, without limitation, any and all balances,
credits, deposits, accounts, reserves, or other moneys due or
owing to any of the Obligors held by the Trustee hereunder or
otherwise) in accordance with the provisions of the Indentures.
(H) UNDERTAKINGS CUMULATIVE. All covenants, conditions,
provisions, warranties, guaranties, indemnities and other
undertakings of the Obligors contained in this Agreement or any
other Financing Document, or in any document referred to in this
Agreement or any other Financing Document or contained in any
agreement supplementary to this Agreement or any other Financing
Document, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions or
agreements of the Obligors contained in this Agreement or any
other Financing Document.
(I) PAYMENT OF EXPENSES AND CHARGES. Each of the Obligors
shall be obligated, jointly and severally, to pay to the Trustee
all out-of-pocket expenses (including
26
court costs and reasonable attorneys' fees and expenses) of, or
incident to, the enforcement of any of the provisions of this
Agreement and all other charges due against the Collateral,
including, without limitation, taxes, assessments, security
interests, Liens or encumbrances upon the Collateral and any
expenses, including transfer or other taxes, arising in
connection with any sale, transfer or other disposition of
Collateral.
5.2 OTHER ENFORCEMENT RIGHTS.
The Trustee may proceed to protect and enforce this Agreement by
suit or suits or proceedings in equity, at law or in bankruptcy, and
whether for the specific performance of any covenant or agreement in
this Agreement contained or in execution or aid of any power in this
Agreement granted, or for foreclosure under this Agreement, or for the
appointment of a receiver or receivers for the Collateral or any part
thereof, for the recovery of judgment for the obligations secured by
this Agreement or for the enforcement of any other proper, legal or
equitable remedy available under applicable law.
5.3 POWER OF ATTORNEY.
Each Obligor hereby makes, constitutes and appoints the Trustee
the true and lawful agent and attorney in fact of such Obligor with full
power of substitution:
(a) if an Event of Default shall exist, to receive, open
and dispose of all mail addressed to such Obligor and remove
therefrom any notes, checks, drafts, money orders or other
instruments included in the Collateral, with full power to
endorse the name of such Obligor upon any such checks, drafts,
money orders, or other instruments relating to the Collateral and
to effect the deposit and collection thereof, and the further
right and power to endorse the name of such Obligor on any other
document relating to the Collateral;
(b) if an Event of Default exists, to sign the name of
such Obligor to drafts against its debtors, to notices to such
debtors, to assignments and notices of assignments, financing
statements, continuation statements or other public records or
notices and all other instruments and documents; and
(c) to do any and all things necessary to take action in
the name and on behalf of such Obligor to carry out the
provisions of this Agreement.
Each of the Obligors agrees, in the absence of willful wrongdoing or
gross negligence, that neither the Trustee nor any of its agents,
designees or attorneys-in-fact will be liable for any acts of commission
or omission, or for any error of judgment or mistake of fact or law with
respect to the exercise of the power of attorney granted under this
Section 5.3. The power of attorney granted under this Section 5.3 is
coupled with an interest and shall be irrevocable so long as any Secured
Obligation remains outstanding.
5.4 EFFECT OF SALE, ETC.
(A) TITLE. Any sale or sales pursuant to the provisions of
this Agreement, whether under any right or power granted hereby
or pursuant to any legal proceedings, shall operate to divest
each of the Obligors of all of any such Obligor's right, title,
interest, claim
27
and demand whatsoever, either at law or in equity, of, in and to
the Collateral, or any part thereof, so sold, and any Property so
sold shall be free and clear of any and all rights of redemption
by, through or under such Obligor. At any such sale any holder of
Secured Obligations may, to the extent permitted by applicable
law, bid for and purchase the Property sold and may make payment
therefor as set forth in Section 5.4(b), and any such Person so
purchasing any such Property, upon compliance with the terms of
sale, may hold, retain and dispose of such Property without
further accountability.
(B) APPLICATION OF PROCEEDS. The receipt by the Trustee,
or by any Person authorized under any judicial proceedings to
make any such sale, of the proceeds of any such sale shall be a
sufficient discharge to any purchaser of the Collateral, or of
any part thereof, sold as aforesaid; and no such purchaser shall
be bound to see to the application of such proceeds, or be bound
to inquire as to the authorization, necessity or propriety of any
such sale. In the event that, at any such sale, any holder of
Secured Obligations is the successful purchaser, it shall be
entitled, for the purpose of making settlement or payment, to use
and apply such Collateral to its Secured Obligations by crediting
thereon the amount apportionable and applicable thereto out of
the net proceeds of such sale.
5.5 DELAY OR OMISSION; NO WAIVER.
No course of dealing on the part of the Trustee or any holder of
Secured Obligations nor any delay or failure on the part of the Trustee
or such holder to exercise any right shall impair such right or operate
as a waiver of such right or otherwise prejudice the Trustee's or such
holder's rights, powers and remedies. No waiver by the Trustee or any
holder of Secured Obligations of any Default or Event of Default,
whether such waiver be full or partial, shall extend to or be taken to
affect any subsequent Default or Event of Default, or to impair the
rights resulting therefrom except as may be otherwise expressly provided
in this Agreement. Every right and remedy given by this Agreement, by
any other Financing Document or by law to the Trustee or any holder of
Secured Obligations may be exercised from time to time as often as may
be deemed expedient by such Person.
5.6 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee shall have instituted any proceeding to enforce
any right or remedy under this Agreement or under any other Financing
Document and such proceeding shall have been discontinued or abandoned
for any reason, or shall have been determined adversely to the Trustee,
then and in every such case the Trustee, the Obligors and the
Noteholders shall, subject to any determination in such proceeding, be
restored severally and respectively to their former positions under this
Agreement and under the other Financing Documents, and thereafter all
rights and remedies of the Trustee and the Noteholders shall continue as
though no such proceeding had been instituted.
5.7 APPLICATION OF PROCEEDS.
The proceeds of any exercise of rights with respect to the
Collateral, or any part thereof, and the proceeds and the avails of any
remedy under this Agreement shall be paid to the Trustee and applied by
the Trustee for the ratable benefit of the Noteholders, based on the
outstanding principal amount of Notes held by each Noteholder, in
accordance with the provisions of the Indentures. If
28
there is a deficiency, each of the Obligors shall, subject always to the
other provisions of this Agreement, remain liable therefor and shall
forthwith pay the amount of any such deficiency to the Trustee.
5.8 CUMULATIVE REMEDIES.
No remedy under this Agreement or under any other Financing
Document is intended to be exclusive of any other remedy, but each and
every remedy shall be cumulative and in addition to any and every other
remedy given under this Agreement or under any other Financing Document
or otherwise existing; nor shall the giving, taking or enforcement of
any other or additional security, collateral or guaranty for the payment
or performance of the Secured Obligations operate to prejudice, waive or
affect the security of this Agreement or any rights, powers or remedies
under this Agreement, nor shall the Trustee or the holder of any Secured
Obligation be required to look first to, enforce or exhaust any such
other or additional security, collateral or guaranties.
5.9 WAIVERS BY THE OBLIGORS.
(ii Each of the Obligors hereby waives notice of
acceptance of this Agreement. Each of the Obligors further waives
presentment and demand for payment of any of the Secured
Obligations, protest and notice of dishonor or default with
respect to any of the Secured Obligations, and all other notices
to which such Obligor might otherwise be entitled.
(ii Each of the Obligors (to the extent that it may
lawfully do so) covenants that it shall not at any time insist
upon or plead, or in any manner claim or take the benefit or
advantage of, any stay (except in connection with a pending
appeal), valuation, appraisal, redemption or extension law now or
at any time hereafter in force that, but for this waiver, might
be applicable to any sale made under any judgment, order or
decree based on this Agreement or any other Financing Document;
and each of the Obligors (to the extent that it may lawfully do
so) hereby expressly waives and relinquishes all benefit and
advantage of any and all such laws and hereby covenants that it
will not hinder, delay or impede the execution of any power in
this Agreement or therein granted and delegated to the Trustee,
but that it will suffer and permit the execution of every such
power as though no such law or laws had been made or enacted.
5.10 CONSENT.
Each of the Obligors hereby consents that from time to time
(before or after the occurrence or existence of any Event of Default,
with or without notice to or assent from such Obligor)
(a) any Collateral or other security at any time held by
or available to the Trustee or any holder of Secured Obligations
for any of the Secured Obligations, or any other security at any
time held by or available to the Trustee or such holder for any
obligation of any other Person secondarily or otherwise liable
for any of the Secured Obligations, may be exchanged with the
Person providing such Collateral or other security, surrendered
or released, and
29
(b) any of the Secured Obligations may be changed,
altered, renewed, extended, continued, surrendered, compromised,
waived or released, in whole or in part,
in each case as the Trustee or the holder thereof may see fit, and such
Obligor shall remain bound under this Agreement notwithstanding any such
exchange, surrender, release, change, alteration, renewal, extension,
continuance, compromise, waiver or release.
6. MISCELLANEOUS
6.1 COMMUNICATIONS.
All communications under this Agreement shall be in writing and
shall be made to the Persons and addresses, and in the manner, provided
in the Indentures.
6.2 WAIVER AND AMENDMENT.
No provision of this Agreement shall be waived, amended, modified
or supplemented except by a written instrument executed by the Obligors
and the Trustee in accordance with the Indentures.
6.3 SURVIVAL.
All warranties, representations, certifications and covenants
made by the Obligors in this Agreement and in the other Financing
Documents or in any certificate or other document or instrument
delivered by it or on behalf of it under this Agreement or any other
Financing Document shall be considered to have been relied upon by the
Trustee and each holder of the Secured Obligations and shall survive the
delivery to each holder of Secured Obligations of
any instrument or other document evidencing the same regardless of any
investigation made by the Trustee, any of the Noteholders or on their
behalf. All statements in any such certificate or other instrument shall
constitute warranties and representations by the Obligors under this
Agreement. This Agreement shall be binding upon the Obligors and inure
to the benefit of and be enforceable by the Trustee and the Noteholders.
6.4 SUCCESSORS AND ASSIGNS.
Whenever any of the parties to this Agreement is referred to,
such reference shall be deemed to include the successors and assigns of
such party, and all the covenants, promises and agreements in this
Agreement contained by or on behalf of any of the Obligors, or by or on
behalf of the Trustee, shall bind and inure to the benefit of the
respective successors and assigns of such parties whether so expressed
or not.
6.5 REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto may be
reproduced by the Trustee by any photographic, photostatic, microfilm,
micro-card, miniature photographic, digital or other similar process and
the Trustee may destroy any original document so reproduced. Each of the
Obligors agrees and stipulates that any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence
30
and whether or not such reproduction was made by the Trustee in the
regular course of business) and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible
in evidence.
6.6 ADDITIONAL PARTIES.
Any Person which becomes a Subsidiary of the Company or any other
Obligor after the Effective Date shall execute and deliver an
acknowledgement and agreement in the form of Exhibit A and, upon
acceptance thereof by the Trustee, such Subsidiary shall become an
"Obligor" under this Agreement for all purposes and shall be deemed to
have made the covenants and agreements of each Obligor set forth herein
as of the date of the execution and delivery of such acknowledgment and
agreement (including, without limitation, the grant of the security
interest contained in Section 3.1) and shall comply with all other
obligations to be performed by an Obligor party hereto.
6.7 CONSISTENT WITH INDENTURES AND INTERCREDITOR AGREEMENT.
Any and all rights granted to the Trustee under this Agreement
are to be held and exercised by the Trustee as trustee for the benefit
of the Noteholders, pursuant to the provisions of the Indentures. To the
extent set forth in the Financing Documents and any other document or
instrument creating or evidencing any Secured Obligation, each of the
Noteholders shall be a beneficiary of the terms of this Agreement. Any
and all obligations under this Agreement of the parties to this
Agreement, and the rights and indemnities granted to the Trustee under
this Agreement, are created and granted consistent with, and in
furtherance (and not in limitation) of, the terms of the Indentures and
the Intercreditor Agreement. Nothing in this Agreement expressed or
implied is intended or shall be construed to give to any Person other
than the Obligors, the Noteholders, and the Trustee any legal or
equitable right, remedy or claim under or in respect of this Agreement
or any covenant, condition or provision herein contained, and all such
covenants, conditions and provisions are and shall be held to be for the
sole and exclusive benefit of the Obligors, the Noteholders and the
Trustee.
6.8 TERM OF AGREEMENT.
This Agreement shall be and remain in full force and effect until
all of the Secured Obligations shall have been indefeasibly paid in
full; PROVIDED, that all indemnities of the Obligors contained in this
Agreement shall survive, and remain operative and in full force and
effect regardless of, the termination of this Agreement.
6.9 ENTIRE AGREEMENT.
This Agreement constitutes the final written expression of all of
the terms hereof and is a complete and exclusive statement of those
terms.
6.10 EXECUTION IN COUNTERPART
This Agreement may be executed in one or more counterparts and
shall be effective when at least one counterpart shall have been
executed by each party to this Agreement, and each set of
31
counterparts which, collectively, show execution by each party to
this Agreement shall constitute one duplicate original.
[Remainder of page blank. Next page is signature page.]
32
IN WITNESS WHEREOF, EACH OF THE OBLIGORS has caused this
Agreement to be executed by an authorized officer, and U.S. BANK
NATIONAL ASSOCIATION, as Trustee, has caused this Agreement to be
executed by an authorized officer, all as of the day and year first
above written.
TULTEX CORPORATION
By:__________________________________
Name:
Title:
CALIFORNIA SHIRT SALES, INC.
By:__________________________________
Name:
Title:
DOMINION STORES, INC.
By:__________________________________
Name:
Title:
TULTEX/T-SHIRT CITY, INC.
By:__________________________________
Name:
Title:
TRACK GEAR, INC.
By:__________________________________
Name:
Title:
[Signature Page to Master Collateral and Security Agreement]
AKOM, LTD.
By:__________________________________
Name:
Title:
DOMINION DISTRIBUTION, INC.
By:__________________________________
Name:
Title:
LIGA MAYOR DE MEXICO, S.A. DE C.V.
By:__________________________________
Name:
Title:
TULTEX SUBSIDIARY (VA), INC.
By:__________________________________
Name:
Title:
TULTEX SUBSIDIARY (MASS), INC.
By:__________________________________
Name:
Title:
TULTEX CANADA, INC.
By:__________________________________
Name:
Title:
[Signature Page to Master Collateral and Security Agreement]
SWEATJET INCORPORATED
By:__________________________________
Name:
Title:
TULTEX INTERNATIONAL, INC.
By:__________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
AS TRUSTEE
By:__________________________________
Name:
Title:
[Signature Page to Master Collateral and Security Agreement]
ANNEX 1
PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY AND THE SUBSIDIARY GRANTORS;
LOCATION OF BOOKS AND RECORDS
[To be Provided]
Annex 1-1
ANNEX 2
LOCATIONS OF INVENTORY AND EQUIPMENT
[To be Provided]
Annex 2-1
ANNEX 3
TRADEMARKS, TRADE NAMES AND PATENTS
[To be Provided]
Annex 3-1
ANNEX 4
REAL ESTATE
[To be Provided]
Annex 4-1
ANNEX 5
FIVE SPECIFIED REAL PROPERTIES
1. Brownsville, TX -- Dominion Distribution, Inc.
2. Fullerton, CA - Tultex Corporation/California Shirt Sales, Inc.
3. San Diego, CA - California Shirt Sales, Inc.
4. Oakland, CA - Tultex Corporation/California Shirt Sales, Inc.
5.Cincinnati/Sycamore Township, OH (new location) - Tultex Corporation,
as sublessee (T-Shirt City)
Annex 5-2
ANNEX 6
NINE SPECIFIED REAL PROPERTIES
1. Phoenix, AZ - Tultex Corporation, sublessee (Dominion Distribution, Inc.)
2. Charlotte, NC - Track Gear, Inc.
3. Tempe, AZ - Tultex Corporation (California Shirt Sales, Inc.)
4. Las Vegas, NV - - Tultex Corporation/California Shirt Sales, Inc.
5. Honolulu, HI - Tultex Corporation/California Shirt Sales, Inc.
6. Kent, WA - Tultex Corporation/California Shirt Sales, Inc.
7. Charlotte, NC - Tultex/T-Shirt City, Inc.
8. Mansfield, MA - Tultex/T-Shirt City, Inc.
9. Mississaugua, Ontario (warehouse) - Tultex Canada
Annex 6-3
EXHIBIT A
[FORM OF ACKNOWLEDGMENT AND AGREEMENT]
ACKNOWLEDGMENT AND AGREEMENT
MASTER COLLATERAL AND SECURITY AGREEMENT, DATED AS OF MAY 7, 1999, AMONG TULTEX
CORPORATION, THE SUBSIDIARY GRANTORS PARTY THERETO, AND U.S. BANK NATIONAL
ASSOCIATION, AS TRUSTEE (AS MAY BE AMENDED, RESTATED OR OTHERWISE MODIFIED FROM
TIME TO TIME, THE "SECURITY AGREEMENT")
[DATE]
Reference is made to Section 6.6 of the Security Agreement as
defined above; capitalized terms used herein and not otherwise defined
herein shall have the meanings specified by the Security Agreement. The
undersigned is a Subsidiary of the Company or another Obligor and, in
accordance with the terms of the Security Agreement, is required to
become a party to the Security Agreement. By execution and delivery of
this Acknowledgment and Agreement and, upon acceptance hereof by the
Trustee, the undersigned hereby becomes a party to the Security
Agreement for all purposes, agrees to comply with all of the covenants
and agreements of each Obligor set forth in the Security Agreement as of
the date hereof (including, without limitation, the grant of the
security interest contained in Section 3.1 of the Security Agreement)
and agrees to comply with all other obligations to be performed by an
Obligor under the Security Agreement.
The correct legal name and address of the undersigned and its
address for all communications is set forth on Annex 1 hereto.
This Acknowledgment and Agreement hereby incorporates by
reference the provisions of the Security Agreement, which are deemed to
be a part hereof, and this Acknowledgment and Agreement shall also be
deemed to be a part of the Security Agreement.
[NAME OF OBLIGOR]
By:________________________
Name:
Title:
Accepted as of the date first above written:
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:____________________________
Name:
Title:
Exhibit A-1
Annex 1
[NAME AND ADDRESS OF OBLIGOR TO BE ADDED]
Exhibit A-2
